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Wall Street's New Frontier: Dallas's Rise in the Financial Sector

Published 12/28/2023, 09:15 AM
Updated 12/28/2023, 09:31 AM
© Reuters.  Wall Street's New Frontier: Dallas's Rise in the Financial Sector

Quiver Quantitative - In 2023, Dallas emerged as a major hub for the financial industry, surpassing Chicago and Los Angeles in the number of finance workers, with only New York ahead. This growth was fueled by the establishment of new campuses by prominent Wall Street banks, including Goldman Sachs (GS), and the relocation of various asset managers such as Fisher Investments and Charles Schwab (NYSE:SCHW). Dallas' appeal stems from its affordable housing, no state income tax, and status as a burgeoning financial mecca in the South.

The influx of finance jobs in Dallas, however, comes with a caveat. Salaries for finance workers in Dallas are notably lower than those in New York, reflecting both the cost of living and the nature of available jobs, which are predominantly in back-office operations. Despite this, Dallas's strategic central location and ease of access through its two airports make it an attractive destination for financial firms.

Market Overview: -Wall Street migration: Major banks like Goldman Sachs, Wells Fargo, and Bank of America invest heavily in Dallas, building new campuses and expanding operations. -Texas boom: Dallas surpasses Chicago and Los Angeles to become the No. 2 city for finance jobs in the US, trailing only New York. -Attractive factors: Cheaper living, no state income tax, and a growing talent pool drive the Dallas financial renaissance.

Key Points: -Big bets on back-office operations: While salaries are lower than in New York, Dallas excels in engineering, customer service, and loan processing, appealing to back-office functions. -Shifting talent pool: Major asset managers like Fisher Investments and Charles Schwab join the Texas migration, diversifying the talent pool. -Political concerns: Laws targeting firms limiting work with oil & gas and "discriminating" against gunmakers pose potential challenges for the financial boom. -JPMorgan doubling down: Despite concerns, JPMorgan doubles its investment banking team in Dallas, highlighting the city's growing importance.

Looking Ahead: -The balance between economic lure and political uncertainties will determine the trajectory of the Texas financial boom. -Dallas aims to attract more executive and investment banking roles, challenging New York's dominance. -The success of the Texas financial hub hinges on talent acquisition, navigating political headwinds, and offering competitive salaries for senior roles.

The Texas political landscape presents potential challenges, especially concerning state laws that scrutinize financial companies for their stance on climate change and gunmaker discrimination. JPMorgan (JPM) CEO Jamie Dimon has expressed concerns that these laws could tarnish Texas's business-friendly image. Yet, the financial sector in Dallas shows no signs of slowing, with Wells Fargo (WFC) and Bank of America (BAC) investing in significant new developments.

The Dallas-Fort Worth area's growth during the pandemic, its central location, and the abundance of engineering and tech talent make it an increasingly important center for finance. The region is expected to see a rise in executive and investment banking positions, with major firms like JPMorgan already expanding their local workforce.

This article was originally published on Quiver Quantitative

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